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Automotive News & Views What if you were in charge of GM?
874 messages, Last post on Oct 28, 2009 at 10:20 AM
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I see at least one columnist at Automotive News had an idea I already had in my mind before, so I will say it out loud here: GM ought to sell Buick to SAIC in China. That is their automotive partner over there that is already single-handedly responsible for Buick's huge surge in popularity there, as well as for the new Riviera concept everyone loved so much. GM makes some cash and has one less needless brand to worry about, and maybe Chinese Buicks still get sold in the States in future. Win win? If GM expanded the Cadillac line to include the BLS and a new Deville worthy of the (new) Cadillac name, they wouldn't lose any money just eliminating Buick from the NA market anyway.
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Replying to: nippononly (Nov 03, 2008 8:56 pm) Wouldn't they have to buyout all the Buick dealers? I think GM would be better off financially to drop most of the Buick models, and make the 1 left a "dog" so that Buick dealers willingly quit the business. But that's a moot point as GM is quickly bleeding to death. Looking at their latest Red Tag Sale prices, I don't see those as helping their sales at all. It's the same old small discounts off MSRP, and an MSRP that's higher than last year (!). Sales are going to be down 40% for a while, and they're going to be losing $2B+/month. |
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All this talk of sell,sell,sell, is a bit premature and may be an overreaction. A few years back, there was a phony e-mail floating around that had GM allowing all the rights to Olds to lapse, and that Toyota was picking it up, and was going to sell "Oldsmobiles", using names like cutlass and 88 and the old, familiar red Rocket emblem. Needless to say, that caused an uproar. Now, picture GM selling Saturn to say Fiat, and Buick to SAIC. Fiat turns Saturn into a winner by selling Fiats as Americanized Saturns, and 10 years from now, SAIC brings Buick back to the US. In the short term GM may have benefitted from a cash infusion, but long term, it may bite them in the rear. A better idea may be to kill them, as you can always bring them backif the situation calls for it, but the BEST idea is to just build cars for those brands that people want. |
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Replying to: cooterbfd (Nov 04, 2008 6:28 pm) Sell 'em, make some cash so desperately needed in the short term, reduce your overhead at the same time, and in the case of Buick, maybe give it a future brighter than the one it has now. |
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Replying to: cooterbfd (Nov 04, 2008 6:28 pm)
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Replying to: nwng (Nov 05, 2008 8:36 am) I did see that a current market estimate on teh Jeep name is around $2 billion (vs. $5 billion a year ago). If Jepp is worth that little, what the heck is Saturn wort? Saab? They would barely cover a month of financial bleeding.....
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Replying to: fezo (Nov 05, 2008 9:27 am) If a buyer could be found with some money to plug into aggressive advertising, Saturn would probably demonstrate previously unrealized sales potential....but GM is spread too thin to ever have any hope of doing this while also supporting its many other brands. As for Buick, you are right on. The only potential buyer to whom it would be worth something is SAIC in China. Saab? Well, Saab and Volvo both seem to be entering that last swirl before they go down the drain altogether. Volvo sales were off like 50% or something last month, or for the year? I forget which, but both the Swedish brands are in trouble. |
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Replying to: fezo (Nov 05, 2008 9:27 am) OK, but what if you were to combine the 2? Under a merger scenario, give all Saturn dealers a Jeep franchise (what is there, 500 nationwide), and give the stronger Dodge & Chrysler dealers (and stand alone Jeep dealers) a Saturn franchise. Let's say you end up with 1200-1500 dealers, and they and they alone have exclusivity to sell these 2 brands, you have a solid, but not overstretched dealer network. Now, you streamline the 2 brands by ridding Jeep of car based small CUV's like the Patriot or Compass, and make the Outlook the next Grand Cherokee or Grand Wagoneer. saturn can keep the Vue, as this seems to be very popular. Now you have ONE very solid dealer network, with a FULL LINE of cars and utility vehicles for them to sell. |
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Replying to: georgecavalier (Nov 02, 2008 7:34 am) This is similar to what I was thinking, and along with Lemko's thoughts on the Impala/Caprice/Bel Air/Biscayne (as well as the knowledge of the taillamps & trim). There was also mention of bringing the GN name back to Buick but since the GN was named for the NASCAR and local races, it really doesn't work. However if Buick is kept and it is felt a performance coupe is wanted / needed, I say GS (GSX) is the way to go. With Poncho, I wouldn't go with Sunfire - honestly haven't thought of names but I wouldn't do Sunfire. But if they are going BMW-hunting it may not be a bad idea to keep the alpha-numeric naming. This is a sticky. I didn't know V8s came in the Colorado, whose name I would change too as well as do a total redesign. And why GM decided to narrow / shrink the rails / engine compartment to not fit the 6-cyl is beyond me. No matter what the scenario, I think the marketing has to follow what the message is behind the brands / vehicle lineup. If they screw it up as they have in the past (most memorable was the Neo-GTO / Monaro) then the buying public once again may be turned off. They need to define the market for the vehicle and go after that main market, and then determine if any niches or sub-markets would also like the vehicle, then make a buzz about it in those circles too. I'd try to tap Wangers and other past sales / marketing persons for direction. I would also try to hold the line if possible on the dealership practices. I know dealers for the most part are their own agents, but they've help kill more than one model and repeat customers by their practices and pricing mark-ups. Lastly I would work on having complete models at introduction, no more of that "coming in a year, the drivetrain that should have been ready when the vehicle debuted will be installed". Or having the better interior fabric that should have been in place when the car intro'd coming two years later. I can see having the sporty version of the vehicle be delayed for a year or two so that the bread-n-butter model(s) grab hold. But to intro what essentially are vehicles lacking in equipment, also-rans if you will, right out the gate is inexcusable. It shows you are not ready to play the game. Falling back on the "wait till next year" doesn't cut it as next year your customer is already driving someone's else product. If your launch needs to be delayed for a week or two to ensure the product is right (quality, equipment, offerings), then so be it. It may hurt you a little up front due to dealers crying and a week of potentially lost sales, but in the long term it will work out as you will sell more models due to the total package being available up front, instead of playing catch-up. Perceived quality and readiness (or lack there of) can be more powerful than actual quality sometimes and a sub-par product is a death knell.
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Several of the suggestions in this discussion were to eliminate or consolidate brands. The following article, which appeared in today's Detroit Free Press, explains why that's more difficult, complicated and expensive than it would appear. It helps one to understand why some of the weaker, money losing brands continue to exist. Read on... "Killing car brands a rocky road Even struggling brands are vital to legions of dealers and they don't usually go down lightly." By Peter Valdes-Dapena, CNNMoney.com senior writer Last Updated: November 4, 2008: 8:40 AM ET "The phase-out of GM's Oldsmobile brand from 2000 through 2004 illustrates the complexities of withdrawing a brand." "NEW YORK (CNNMoney.com) -- As General Motors struggles to sell cars, one repeated bit of advice is that it needs to shed some brands -- especially if it joins forces with Chrysler. But there's one big roadblock in the way -- the dealers who sell those cars. 'It's very difficult,' said Tom Libby, an auto market analyst with J.D. Power and Associates "and very time consuming," Libby formerly worked for Ford Motor Co. (F, Fortune 500) His job was to help open new dealerships and work to close underperforming ones. There is only one way to get an auto dealer to close up shop, he said: 'It almost always involves the manufacturer paying the dealer to close his doors,' a tricky business of asking dealers to give up their businesses. 'All states have some form of protection for car dealers,' said Matthew Moloshok, a New Jersey lawyer who is former head of the American Bar Association's Franchise and Dealership Committee. State laws often restrict the terms under which a manufacturer can refuse to renew a dealer's contract and the terms under which they can allow nearby dealerships to open. Anything seen as 'coercion' is also usually prohibited. Laws also prevent manufacturers from favoring one dealer, for instance by selling vehicles at a lower price to one dealer than to another. Car dealers need those laws to protect themselves from capricious actions by carmakers, Moloshok said. Unlike clothing retailers, for instance, who may sell products under a variety of brands or who could easily switch from one supplier to another, a car dealer is married to that brand. Further complicating the matter: No single approach works, because laws vary from state to state, according to Libby. And dealership franchise laws are usually much stronger than laws that apply to other types of franchisees, said John Frith of Urban Science, which consults automakers on dealership location strategy. 'Dealers typically have more money so they have a little bit more influence with the legislature than the local Subway,' he said. Not your father's phase-out GM's experience with phasing out its Oldsmobile brand in the early 2000's shows how hard it can be to get dealers to close or change their line of business to match a manufacturer's strategy. And moving to another GM brand wasn't always possible because of competition from nearby dealers. 'I had good friends who were Oldsmobile dealers that are just out of the car business,' said Reed Trickett of Nashville, Tenn., a former Olds dealer. Oldsmobile sales made up just 1.6% of America's market share in 2000, a sharp drop from 6.5% a decade and a half earlier when it had been one of America's top-selling car brands, according to market trackers at Autodata. At the time, GM (GM, Fortune 500) said it jut couldn't find a way to make Oldsmobile profitable again. After he was presented with a buy-out offer from GM, Trickett said he called lawyers and seriously considered suing. He ultimately decided to take a cash pay-out GM offered, using the money to expand his adjoining Honda dealership. Of the 2,800 Oldsmobile dealerships in operation in 2000, most accepted GM's proffered buy-out packages. Amounts varied depending on the dealer's sales volume in prior years and what percentage of those sales came from Oldsmobile. But dozens of other dealers did fight for more money from GM, according to lawyers who represented them. 'We ended up with 19 lawsuits in 17 different states, I think that was the final number,' according to Florida attorney Richard Sox who said at least 100 dealers hired his firm to fight GM for more money. Each of those states had its own set of laws under which the suits were filed, argued and, in most cases, negotiated to settlement, he aid. After that, GM simply started negotiating higher-priced settlements without waiting for a legal filing. One case is still not resolved, Sox said. GM would not comment on the amounts but, according to media reports from that time, packages varied widely from tens of thousands to more than a million. And GM did assist many dealers by helping them shift to other brands, said company spokeswoman Susan Garontakos. GM would not say how many dealers sued or negotiated while threatening to sue. Shrunken but not dead At least GM's approach in the Oldsmobile case -- an outright killing of the brand - gave dealers a fighting chance, said Sox. 'The worst-case scenario for the dealers is what's happening now with some of the line-makes,' he said, using another term for brands. Instead of just dropping them, manufacturers are simply shrinking the line-ups of some brands and combining them in one-stop dealerships with other brands. This is what GM is doing now with its Pontiac, Buick and GMC line-ups. Besides reducing the number of dealerships, "brand channeling" is supposed to allow each brand to more tightly focus on a core vehicle type while still allowing the dealer to sell a full line-up of cars, trucks and SUVs. But according to Sox, 'They're strangling these line-makes so they're not viable.' Buick now has just three vehicles in its line. For a Buick dealer, GM's invitation to work out a business deal with a nearby Pontiac dealer is pretty hard to resist. GM spokeswoman Garontakos took issue with Sox's view of the process. She called the plan good business for all involved and not an intimidation tactic. Besides, said Frish of Urban Science, dealerships represent their brands to consumers, for better or worse. No carmaker wants to deliberately starve any on-going dealers. 'It's just not good to have dealers going out of business,' he said, 'The brand's value is tarnished in the marketplace.' " This article makes it clear that it's far easier to offer solutions regarding what GM, Ford and Chrysler should do than to implement them, particularly in light of their current cash squeeze.
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